SAP’s Stormy Cloud First strategy needs a ray of sunshine !
Dragon ERP helping CIO’s and CFO’s define their Cloud First and SAP S/4HANA migration roadmap
As President Kennedy remarked;
"Change is the law of life, and those that look only to the past or the present are certain to miss the future."
Dragon ERP is a major advocate of SAP’s Cloud First strategy as a major business change enabler, and for 50 years SAP have been helping change how the global economy operates.
The statistics speak for themselves:
99 out of the top 100 global companies run SAP with 92% of the global 2’000 adopting SAP and 87% of all global commerce $46 Trillion is generated by SAP customers.
Many of SAP’s customers are what we call early adopters, they are consistently evolving how they operate, whether its setting new mega trends, dealing with geopolitical forces or simply embracing the latest in tech, these early adopters have already mapped a path to a hybrid SAP cloud strategy, where they go the rest follow, for them cloud first is the norm.
But there are many SAP customers that are people and process optimised and don’t have the capacity or capability to constantly evolve, so they have to prioritise investment and prioritise change, so even though the case for cloud first is compelling, they don’t currently have the bandwidth to pursue it.
So SAP are really pressing all the wrong buttons with a key part of the SAP ecosystem, in their drive to hit its SAP Cloud ☁️ Revenue targets.
Strike One:
In the space of a week SAP have announced all new product enhancements will only be made available to SAP RISE Cloud customers and no longer to the traditional on-premise install customer base. Ouch imagine being a loyal customer for 40+ years and then being told your not going to benefit, its clear ageism !
Strike two:
Then no sooner had the first message landed that SAP announced an increase to on-premise customer maintenance, where has the love gone ?
The 80/20 rule in play, in an ideal world Cloud First on a clean SAP core is the way to go.
But there are always exceptions, the 20%
So every new hot 🔥 SAP strategy needs a pressure valve to help release the steam.
Because sooner or later the install on-premise client base will move to the cloud, and will in the interim be happy to pay a premium to stay with SAP on-premise whilst benefiting from SAP innovation. Thus enabling SAP to continue focusing on the business leaders and not CIO’s to evangelise the power of SAP to innovate, optimise and drive growth.
Cometh the hour cometh the Dragon Peace makers !
Some pragmatism is required on the part of SAP, we all want harmony in the SAP ecosystem, the whole point of SAP is to enable sustained change, so an element of business change management is required by SAP in their own backyard, not the current shotgun approach:
Solution 1: Already part in place
In this instance would it not have been better for SAP to do a deal with the hyper-scalers #aws #azure #gcp and extend the SAP S/4HANA PCE Customer Data Service service with SAP providing the a Basis "concierge" service.
Enabling SAP customers with Data residency and labour concerns to move to a half way house, benefiting from RISE and PCE.
A Win win, peace and RISE revenue in our time.
https://www.sap.com/products/rise/customer-data-center.html
Solution 2: Rise Lite
Offer the extensive SAP Cloud product range, on-premise but at a higher premium. Bundling SAP software for on-prem deployment will come at a cost, but as long as the cost is covered and new pseudo cloud revenue booked under a RISE lite deal covering Cloud software bundled for on-prem, then what’s the problem.
Why drive loyal customers towards Oracle or Infor ?
(Essentially this will formalise RISE for ECC as well, we know SAP have done a number of hybrid deals allowing SAP ECC users to benefit from SAPs cloud poduct range.
The reality is you can still take ECC, stick it on to a hyper-scaler, and then link to the best of BTP and SAP cloud, as we repeatedly say, give Dragon your ECC and we will give you another 10 years of value).
Real World observations playing out from this shift in strategy:
1) SAP Huff and Puff
No one knows SAP Clean Core and Cloud First better than Dragon ERP, so we suspect many On-premise ECC customers will adopt S/4 2023 on-prem, after all of the huff and puff SAP won’t say no to new clients wanting to adopt S/4 on-prem. Lets not forget 2023 is supported until 31/12/30 and the likes of Rimini Street could keep it going for far longer until 2040.
2) S/4 Upgrade Confusion
Existing on-prem S/4 Customers on 1709,1809 and 1909 needing to migrate to S/4 2023 are already benefiting from a clear migration path and maintenance strategy outside of RISE with no mention of a degradation in the maintenance strategy until 2030.
So if SAP are now telling customers that have committed to an on-prem S/4 2023 migration path that they are now on a lesser version of S/4, then I’m sure SAP will be sued to hell.
This will simply delay the S/4 upgrades and cause an ever worsening delivery capacity issue within the SAP ecosystem.
3) RISE Lite
Lets not forget many of these SAP customers do have labour and data residency issues to resolve so we believe they will adopt a hybrid model with a mix of SAP on-prem and cloud, enabling SAP to flog these loyal customers a RISE lite deal for the bits of the SAP cloud they can use, essentially a continuation of current practices.
4) S/4 isn’t complete !
SAP also need to reflect upon the Continuity Pack concern many ECC customers have due to the gaps in S/4, yes gaps, which are stopping loyal ECC customers moving to S/4.
Thanks to SAPs excellent Composable ERP messaging, ECC customers know they have a choice and don’t need to use SAP for lots of areas such as P2P and HCM.
So Continuity Packs + On-premise uncertainty will simply lead to either migration paralysis or customers leaving SAP, something none of us want, as ultimately SAP is the place to be for innovation.
5) What now for the hyper-scalers
SAP need to reflect upon the hyper-scalers and their investment they have made in the SAP hosting space for S/4 and BTP, how they will react ?
There has been a simmering platform war between SAP and the hyper-scalers for last four years, it felt as if the right balance had been found.
Now the hyper-scalers can decimate the SAP BTP market by going into direct competition with SAP.
As we posted last month why do I need SAP Data sphere when my platform can offer the same but cheaper ? as an example.
Inconclusion:
We are really disappointed that messaging has gone back to tech, string and tin,
PaaS, SaaS, IaaS, no one in the business cares about tech.
Why do so many SAP programmes fail, because they are tech led, tech focussed and don’t engage the business.
Hopefully this is just a blip, a compromise is found and focus moves back to the “why” SAP matters to the business.
We help customers understand and deliver their obligations to de-risk and enable successful business transformation. We take the pain out of the delivery model by helping to select and manage the myriad of third party partners required to deliver complex SAP business transformation.
Covering the full delivery lifecycle Dragon ERP provides a one-stop shop delivery and governance service, adding delivery "firepower" where required. Dragon ERP, A SAP full flavour system integrator helping organisations adopt SAP S/4HANA — Dragon ERP
Unlike the legacy monolithic SAP system integrators Dragon ERP doesn't land and expand, we provide a fractional model which runs at your speed. When you need us we are there, when you don’t we will be gone, we don’t land and expand.
If you starting your SAP journey, or need help breaking down the tidal wave of competing priorities preventing organisations unlock the real value of SAP, then contact a Dragon.
Dragon ERP, A SAP Target Operating model Innovation Integrator , changing the way organisations unlock the value of their SAP investment.
If you want to know more about how SAP is changing and how Dragon ERPs Plug and Play transformation methodology unlocks accelerated benefit realisation then contact a Dragon today.
https://dragonerp.co.uk/contact-us
About the Author:
Alisdair Bach, Dragon ERP Co-founder is a SAP mentor and influencer with over
33 years’ experience in shaping the SAP journey for the
global 2,000.